Why video games cost so much to make

Video game publishers are notoriously secretive about the budgets behind their games, but when a number does slip out, it can be shocking. Games like Call of Duty and Grand Theft Auto cost hundreds of millions of dollars to make, which is tough to fathom—until you do the math.

While reporting for my recently released book about how games are made, I asked a ton of developers how they calculate their budgets. A few of the bigger companies wouldn’t get into specific numbers—like I said, notoriously secretive—but all of the studios that did answer offered the same magical number: $10,000. Specifically, $10,000 per person per month.

“That’s a good ballpark number,” said Obsidian’s Adam Brennecke, executive producer of Pillars of Eternity and its upcoming sequel. “Based on the average salary for a developer plus overhead, it costs about $10,000 per person at the studio. Some are more expensive. And that’s how you usually do budgets with publishers too.”

That number—which might go even higher if you’re in an expensive city like San Francisco—accounts for salary, office rent, insurance, sick days, equipment, and any other costs that come up over the course of development. It’s widely considered to be a good estimate for how much a video game production will cost, no matter how big a team gets.

So let’s do some math.

Say you’re an indie studio that just raised some money on Kickstarter. You think you can make your Earthbound-inspired, 16-bit-style RPG in a year and a half (18 months) and you think it’ll take five people: a designer, a programmer, a musician, and two artists. 5 * 18 * 10,000 = $900,000. Hope you didn’t have any stretch goals!

Say you’re a mid-sized team like Obsidian or Double Fine. You’re making a new console game that needs to look good, but nobody expects you to have the most polygons or the highest-end graphics. You’re putting a team of 40 on your psychedelic rhythm game, and you’re planning a schedule of around two years (24 months). 40 * 24 * 10,000 = $9,600,000. Don’t worry—at least people on the internet will accuse you of stealing money!

Say you’re a massive publisher that’s trying to compete with the Red Dead Redemptions and Destinys of the world. You’re making a military shooter, of course. In order to hit the graphical fidelity that your fans expect, you need a staff of at least 400, and you need to give them three years (36 months). 400 * 36 * 10,000 = $144,000,000. And that’s before the inevitable delay, not to mention the marketing. Those CGI commercials aren’t gonna pay for themselves.

I might be lowballing here. Many big games have development staffs across multiple studios, and if you go into the credits and count up everyone on a game like Destiny 2 or Assassin’s Creed Origins, you might get into the thousands. Multiply that $144 million budget accordingly.

This is why video games cost so much to make, why video game companies are so volatile, and why observers like me worry that the video game industry’s current path is not sustainable.

This article was originally posted on Kotaku. Republished with permission.